WHO is the Fed Bailing Out? November 2019 Repo Market Update


Hey everybody. Jeff
Nabers here. Welcome back. We’re talking about the
fed repo bailouts. Why? Because they’re still going on and October
the news was the fed bailouts and the repo markets will continue until at
least November 4th it’s November 12th and I’m recording this and they’re
still doing them coming up. We have a serious problem. If you didn’t open your windows and
look out in the real world on paper, we’re in an economic depression, but because of all of this
financial engineering, we’re sitting here looking at a
scoreboard and add the control of that scoreboard is the federal reserve and
they’re manipulating the scores through interest rates to juice the stock
market up and to juice other measures of financial strength up when behind
the scenes there’s a lot of financial weakness. What the repo market bail outs represent
is that after a long string of the VAD winning battle after battle
in manipulating interest
rates to keep the economy propped up, we may be reaching
a point where they lose the war, so why are they doing the bailouts?
That was the topic of our last video. In this video we’re going to talk
about who is getting the bailout money. Comments were recently made by our fed
overlord Jerome. Okay, can’t say that. Okay. Let’s look at some recent comments
made by fed chairman Jerome Powell, where he spoke about banks
not as borrowers in the
repo market but as refusing to lend. So let’s just take this at face value
and not assume that it’s misdirection. This brings us to the question, who’s
borrowing the money in the repo markets? If it’s not, the banks found an interesting article
from wall street.com link in the description below. In this article it
brings an example of AGNC investment Corp, which is not a bank. It’s actually
a real estate investment trust. So here’s what AGNC has essentially done. They have raised equity
money from investors in the
amount of about $10 billion, but have been borrowed about
$100 billion from largely, you guessed it, the repo markets. So they’re borrowing from the repo markets
that under 3% interest and investing in mortgage back securities
at a higher level of interest. This is what’s known as a free money game. Borrow at one interest rate, invest at a higher interest rate and
the spread or the difference is your profit. So far so good,
right? What’s the problem? The problem lies in the
difference in timeframes. The investments they’re making
are longterm and they’re
making those investments with money that they borrowed short term. The majority of the money they have
borrowed is coming from the repo market, some of which is due back the next day, some of which is due back 14 days later, which forces them to have to roll
over the debt or renew the debt. So they’re constantly
reborrowing from the repo market. And this means that for their
scheme to continue to work, the repo market needs to continue to
offer cheap money at interest rates lower than what the market wants. Their is a bet that the federal reserve
will continue to successfully keep interest rates lower than what
a free market would provide, which becomes a bit troubling. When we saw the interest rates
spike to over 10% in September. Now it’d be clear, I’m not saying that specifically AGNC
needed a bail out or that AGNC is problematic or the
agency did get a bailout. What I am saying is that there are many
companies like AGNC who game the system and borrow cheap money and invest for
a higher interest rate and make that spread. They’re playing
that free money game, but it only works when the
interest rates stay low. So in a way we are nearing or at some
sort of major economic crossroads or tipping point. Interest rates serve
an important function in economies. Interest rates are between
borrowers and lenders, but over recent years the fed has stepped
in as an unrelated third party and push interest rates lower than
borrowers and lenders would agree to independently. As this has continued to occur, the structure of our financial system
has more and more begun to resemble that of the Soviet union and its central
planning and less and less resembling the United States financial system that led
to all the growth and prosperity of the 18 hundreds and 19
hundreds. So let’s recap. The repo markets to some extent are being
used as a source of artificially cheap capital to just make
free money out there, uh, with financial engineering in a way that’s
completely disconnected from the real economy as covered in previous
videos. In the real economy, real unemployment is extremely high. Consumer debt levels are higher
than they were in 2008 government. That levels are higher than everybody
thinks they are and higher than they were in 2008 and almost all
measures of the real economy. We have a serious problem on paper. If you didn’t open your windows and
look out in the real world on paper, we’re in an economic depression, but because of all of this
financial engineering, we’re sitting here looking at a
scoreboard and add the control of that scoreboard is the federal reserve and
they’re manipulating the scores through interest rates to juice the stock
market up and to juice other measures of financial strength up when behind
the scenes there’s a lot of financial weakness. What the repo market bailouts represent
is that after a long string of the fed winning battle after battle
in manipulating interest
rates to keep the economy propped up, we may be reaching a point where they
lose the war and when interest rates go higher, all of the funds and institutions and
banks and investors and various economic players who have been using strategies
that depend on cheap money will have some serious problems. Now, the fact that the bailouts are continuing
to happen in the repo market could mean that they’re working. It could also mean that they’re not
working and if they’re not working, we may see them switch from bail
outs to bail ins as a strategy. It’s an emergency measure that may
become necessary in the eyes of Congress. If these cracks in our
system continue to spread. I’ve been promising you a video
on bail ins and it is coming next, so make sure that you are subscribed.
If you’re not already subscribed, if you like staying plugged
in to financial news, that empowers you to take control of
your finances and bail out yourself. Then made sure that you click the
like button and a comment below. Let me know what you thought of
the video. That’s it for this one. I’ll see in the next one where we
talked about bail ENS. As always, check the links in the
description for further resources. Thanks for watching and I’ll
see you in the next video. [inaudible].

4. How To Identify Stock Market Direction (Trends) Part 1


Hi I’m Prateek Singh from MarketScientist
TV and welcome to another episode
Today we are going to learn about market direction, now it’s very interesting because everyone
keeps coming with this question “will the markets rise?” or “will the markets fall?”
well, using just a few technical tools and I’m not talking about indicators, just pure
price action we can actually determine market direction, now market direction is actually
referred to in the technical world as “trends” So a stock moving upwards, is in an uptrend
And a stock moving downwards is in a downtrend sometimes stocks reach in a no trade zone
or a sideways and this happens because as soon as markets go up it forces a situation
of supply and when markets fall down it forces a situation of demand coming in.
This was seen in the earlier half of December 2012 on the nifty hourly charts.
Lets move on, when we use concepts of supply and demand over long periods of time you must
realise that psychology exists on all timeframes, Except of course in tick-charts; wherever
you have good volume, markets will always behave in the same way if your concept is
technically sound. So let’s see how you can become your own amateur
financial analyst, determining whether your stock that you are stuck in or making a profit,
might continue to move up or might continue to move down.
Si the first thing we are going to learn is about a rally and a decline
A rally and decline are seen on a per bar basis, meaning we look at one bar and then
the next. Simply put a rally is an upmove
A Decline is simply a down move They together form something more important,
which we will discuss later lets look at a rally first,
So this is one bar this isn’t enough information, the next bar breaks the previous bars high
and this continues to happen Now you will notice that every bar is breaking
the previous bars high and its also having a higher low.
This means the market is in rally mode. Also remember in a real market situation this
may not happen consecutively but a general move up is still considered a rally.
A decline is just the opposite, and I’m sure intuitively u have understood what I’m about
to draw here. So the market falling down each consecutive bar breaking the previous bars
low and making a lower low every bar So that’s very simple, here is another rally,
which makes a new high and here is another decline. so now that we have that, you can see that
we have formed a wave structure, markets will always move in waves, markets will never plunge
down or move up unless it’s an erratic day or days. Over general long periods of time,
markets will always move in waves and this is very healthy.
So now that we have understood a rally and decline let’s move on to swing highs and a
swing low. Simply put the meeting point of a rally an
upmove and the immediate decline; this tent, mountain or this peak is called a swing high.
the opposite of this is a swing low, meaning the meeting point of a decline and the immediate
rally is a swing low. Now trends are made up of swing highs and
lows, people call these by different names but all technicals follow this because a swing
high is a naturally place of resistance, it basically means that the markets rallied hit
a supply point, either buying diminished of too much selling happened and we fell, now
the longer time frame between a swing high is untouched the more important it becomes.
At MarketScientist we follow trend following methods/systems, so awhat we discuss in this
video and the next is extremely important, if you don’t understand please rewind or you
can ask questions by emailing us or writing it in the comments below.
Here is a real example of a chart, this chart belongs to nifty and it is basically in downtrend,
but what we have to look now is the swing highs and swing lows.
I want you to take am moment and try to find the latest swing highs u can see here
I’m helping you a bit and marking all of the swing highs on this chart. I’ve marked them
with green circles. Next step is to indentify swing lows, now
before we proceed I want you to pause and take your time and look at the swing highs
and know that you have understood this. We are basically looking for peaks (swing highs)
and crests (swing lows). I’m marking the first the swing lows for you
and I want you to mark the resting your head or write it down somewhere. Pause this video
and find out all the swing lows, we will meet in the next video with the answers…. I’ll
be waiting for you then.

BUILDING YOUR PROPERTY BUSINESS | The Property Voice


– Yep. – We’re not giving a specific (mumbles)
– No we’re not (laughs) (modern pop music) – Hey Ruple. – Hey Richard. – Thank you for joining me again, it may be the last one for a while, let’s see,
– Yeah, let’s see. – Just gonna address the camera
quickly as I’ve been doing, two smart buddies having a chat. Today, or now, we’re gonna
– Yeah. – talk about building a business. – Yep. – Maybe the nuts and
bolts and maybe also some of the softer issues as well, so. – Yeah. – Let’s get into that. I think we could take this – (mumbles) – variety of directions,
– Yes we could. – couldn’t we?
– Yep. – Do you want to start us off? – Oof, yeah, I guess well
it’s something that we sort of talked about before, you know, off-camera, was (clears throat) regardless of where you
are at in your business, it’s important to treat
your business as a business, and it’s infinitely
easier to start doing that from the beginning, before
you’ve got this huge, you know, portfolio or whatever it is that you’re working towards,
and having to go back and retroactively sort of business-ize it. So, yeah, I would say just, you know, from as soon as you possibly can, start treating your
business as a business. – Yeah, that’s a really
good tip, and I think, so what do you know, there’s
a few things that means, isn’t it?
– Yeah, quite a lot. – So it may be you need to
incorporate, for example, you know, to get some
advice as well is the right thing to do.
– Yep. – We’re not giving it specific (mumbles)
– No, we’re not. (laughs) – It’s not some advice
– Exactly. – (mumbles) that I’ve kind of got advice which is to mean that I’ve experienced it, – Yep. – And some of the things that, you know, maybe could be good to get under wraps. So, for example, I’ve recently
taken on a bookkeeper. – Okay. – I was doing, I’m financially
trained, accountancy trained, – I forget that, yeah. – And I was quite capable of doing that. – I was gonna say, you
are qualified, actually, to give some advice (laughs) – Well, to an extent.
– Yeah. – But, the point is this. I was probably hanging on to
it too long, that’s my point. So, because I could,
– Yeah. – doesn’t mean I should. – Yep. – And so, you know, that was a job probably I should have
just given up a while ago, and I’ve got a bookkeeper
now, and I’m not really paying so much money for that, so a service? – Yeah. – And you can get, you know,
services live app from, actually fairly low-cost locations now. – Yeah. – You know, using, I was
just talking about some of the way you can find it now. – Yep. – So, I don’t know about
you, but I’ve took on PeoplePerHour, – PeoplePerHour, yep. – Or there’s Fiverr
– Fiverr is amazing. – So there’s places like that.
– Yep. – There’s Upwork,
– Yep. There are lots of places. So you can find contractors who work in your business entity, you don’t have to have a full-time person – No, yeah, you don’t need to start adding to payroll, you know, you just, yeah.
– Absolutely. So, you know, that’s
one tip, is treating it like a business, and
specifically, you know, what should you be doing? As opposed to what could you do? – Agreed. And I think one of the things that has really helped us in our business, make it a proper business,
is from the very beginning when it was literally just one property, and me and my husband doing everything, was actually doing things as sort of boring and
unsexy as having AGM, so annual general meetings
where every January we would sit down together,
and have a board meeting, and the board was just the
two of us, it still is. But this was a habit we
started from the beginning because we wanted to treat
our business as a business. So those board meetings
would cover our strategy, would cover our sort of
allocation of resources, would cover the division
of labor, all of the things that we were doing in our
business, we had a plan, we had targets, we had goals,
and then we reviewed them. So we would have a January AGM,
and then a mid-year review, to see how we were measuring
up against the various plans and targets that we had
set up for ourselves, because that is how businesses run, you don’t know where you’re, you know, how do you know if you’ve gotten there, unless you’ve got a target
– Yeah. – and a very clear plan,
and it doesn’t mean you still blindly stick to it, but it just, it gives
you a roadmap to follow, and then objective measures to make sure that you’re getting there. – Well, that sounds very grown-up. You know your stuff.
– Yes, well. (laughs) – And of course you’re
a husband and wife team, – Yes. – So, but were you doing this
’round the kitchen table, sort of thing
– Yeah. – Or did you kind of
do something different? – Initially, it was the kitchen table. – Right. – Though, if you are anything like me, working from home comes with
a bit of, you have to be very disciplined to not
– Yeah. – Sort of feel the lure of the kettle, or of the washing machine,
– or the TV. – Or whatever it is for you
– Yeah. – You know, chores that need to get done. And so, we started doing
them, actually our very very first one was at an airport,
because we were flying and got delayed and so we’re like, well – Let’s have an AGM. – Why not? It’s about
the right time of year. Be productive with our time, etc. – Yep. But no, then the kitchen table,
and then what we’ve realized is actually, we need to
go somewhere separate – Okay. – Without distractions,
– Or interruptions. – Without interruption,
– Yeah. – So now we go to just a local hotel that’s got a nice lounge, decent food, – Yeah. – You know, whatever it
is, so you have no excuse to break up the flow of the conversation and of the meeting’s agenda,
we set an agenda as well, beforehand, and that way
you just make a day of it like you would in any other corporate AGM. – Yeah. I mean, I think it’s so
important to have some formality, – Yeah, definitely. – I know it sounds boring,
– Yeah. – Again, we’ve talked about
this a number of times – Yeah, yeah. – In some of our interviews,
in some of our conversations, – Yeah, yeah. – But, I think if you set,
you know, time in your diary, – Yep. – So for example, you just write
AGM, annual general meeting – Yep. – So that’s, and then you
have a midpoint review, so every year you have an AGM, I guess? – Yeah. – Yeah, and then you
have a midpoint (mumbles) – Yep.
– Every six months? – Yep. – I review that, so it
makes a lot of sense to me. When I was working more along,
I have a date with myself. – Yeah, exactly. – In my diary.
– Yeah. – And when I was working
with other people, I actually set more like
monthly review meetings as well. I’d even, a weekly catch-up. – Yeah. – So, you
– Definitely. – Have an idea of these milestone reviews. – Exactly. – Diarizing them, – Yep. – Maybe changing the
environment a little bit. – Definitely. – So you can do that. And as you’ve said, kind of
treat it like a business. – Definitely. – So I think that’s good, to do that. One of the things, on
the sort of softer side, that was coming into my
mind as you were talking, yes I asked you if you do
it ’round the kitchen table. – Mm-hmm. – So someone I was talking to recently, he’s working from home. – Yep. – And we were talking during the summer. So you know what that means, when you’ve got a young family. – Mm-hmm. – The kids were at home. – Yep. – And he was saying, I
can’t seem to get much done. – Yeah. – We’ve got family
around, and that’s great, – Yeah. – Obviously to have the family around, – Yeah. – But from a business point of view, there was a big distraction. – Yep. – So we talked about the
idea, of it just one, or maybe two days a week? – Yeah. – Going to, like, I don’t want to promote any particular brand,
– No, but a cafe, or a restaurant, yeah.
– Serviced office, or, you know, he actually
picked like a serviced office, – Great. – And, (mumbles) in a sort
of a more cafe environment right now
– Yep. – Which is really nice, by the way. – Yep. – And, but you know, just to get out. – Yes. – And then focus. – Yes. – You know, ’cause I think,
you could probably take this in a number of different directions, – Yeah. – But if you focus, you can
be much more productive. – Oh, god yes. And I think, you know, one
of my favorite quotes is, the task expands to
fill the time allotted, so if you give yourself
a week to do something, you’ll take a week. If you give yourself 4
hours, you’ll take 4 hours. And having that focused time
without the distraction, without the noise, both
sort of mental noise as well as actual noise,
– Yeah. – It makes all the
difference in the world. I was actually just speaking
to Amenti yesterday, and I was having this
exact same conversation, and she was saying that
sometimes she gets her best work done in the car, or at Ikea, you know, in the restaurant at Ikea,
you choose your location, it doesn’t matter, but it
has to be a protected space, away from the distractions
of home life or other things, where you can just focus on your business for a specific amount of time. – Yeah, I think so. This idea of focus, I mean so for example, there’s lots of things we
could probably talk about with time management, one
particular one that I find that, I mean, I actually did track
every single action I did, – Yes. – On one particular day.
– Yes. – I counted 49 different actions. – Yep. – Excluding brushing my teeth. – (laughing) yeah. – You know, so I think it was 49, – Yeah. – I was absolutely
blown away with how many individual tasks I did. – Yep. – But what I realized is, what
was really important to me, was only a small number of things. – Yep. – So I actually have what
I call a 3 to 5 list. – Oh, okay. – And I discovered, literally,
as for the important stuff, for me
– Yep. – I could only achieve
between 3 and 5 items per day. – I like that. – That was really important to me. So, that’s what I did. So I had then one of my 3 to 5 things that I must do for me
today in the business – Yep. – And I thought that’s my priority, that’s what I get done. – That’s fantastic.
– So you had 49 – Yep. – But how many of my 3 to
5 am I getting done, so – Yep. – I was focusing only
what’s really important, – Yes. – Because it could just drift. – Well, and that sort of
gets onto something else that I think is really
important at every stage, is being very very aware, consciously, of the high value stuff
vs. the low value stuff that takes up our time and
our energy and our effort, because not all tests are created equal, brushing your teeth is
a benefits and results, as you know, having a meeting
with a contractor, you know, and so you have to be. – It’s probably a good
idea to brush the teeth – Yes, of course.
– Before having the meeting. – At least twice a day,
obviously, you know, good hygiene is equally
important and valuable, but as far as sort of
looking at your business and where you should focus your
time and effort and energy, most of it really should be focused on the high value stuff. Now look, in the beginning, can you do all of the high value stuff? No, because somebody’s gotta,
you know, create the AST, somebody’s gotta do the viewing,
somebody’s gotta do the, you know, staging the
apartments, houses, whatever, you’ve gotta do a lot of the
low value stuff yourself, but as your grow, and as you
have, can financially justify taking on expenses or
delegating to somebody else, then it’s key to make sure
that you’re delegating as much as possible of
the low value stuff, and keeping on for yourself as
much of the high value stuff, and that will, again, you
know, you said about this in a different recording
about fix and flex. At different stages as you
grow, what is high value and low value will change, and sometimes some of the low value
stuff will just naturally be eliminated because you
don’t need to do it anymore, or it doesn’t matter for
your business anymore, and that’s fine. But it’s always being very conscious of how you are investing your time. – Yeah, I agree. And I think, you know, in terms
of high value vs. low value, I think, you know, as a
principle probably we get it, we understand what we mean, – Sure. – But nobody really gets it, and understands it.
– Yeah, yeah. – So what I mean by that. So I had an exercise
with somebody recently, and I said track your time, – Yep. – In let’s say project management. – Yep. – In that particular area. What are you doing, how
much time are you spending, – Yep. – Then work out your
equivalent hourly rates. And then you’ll find out,
you’ll be able to find out what is high value, – Yep. – And what is low value. What should you be doing,
what should you get some other person to do. – Yeah, agreed. – So of course (mumbles),
so if you know what your hourly rate should be, let’s say it’s fifty pounds an hour,
just to pick a number. – Sure.
– 25, 50, 100, whatever. You know what it should be. – Yep. – Then you focus on that,
and if you can then bring in someone and pay them, say,
10 or 20 pounds and hour, – Yep. – Or dollars, or whatever. – Yep, yep. – It makes much more sense
– Yep. – To give that task away
– Agreed. – But people are very reluctant
to do that, aren’t they? – And it’s funny because, you know, we do that when we’re
employed by other people, we know what our hourly rate
is when someone’s paying us, but to come up with it for
ourselves somehow feels like you’re sort of tainting
the purity of your business. There’s a financial reality
to everything we do. – Yep. – And money is important to talk about, and to feel comfortable talking about, and also having a quantifiable
value on your business time. – Yep. – You know, you’re not gonna
necessarily say, oh well, you know, spending time
with my kids isn’t bringing in money so I’m not gonna
do it, no, of course not, we’re not saying to go
extreme and be crazy, but when you’re working in your business, it’s important to know the
tasks that you are doing are worth your time. And you can only know that by valuing it, by putting an actual figure on it. – Yeah, and the thing is
you’ve obviously got a, a partner (mumbles)
– Yep. – In your business.
– Yep. – So, when I started out, I didn’t. And so one of the things I
think a lot of people start is solopreneurs
– Yep. – You know, and then we progress maybe into a bigger business,
more people around us. Even as a couple, one of the things that doesn’t really get
spoken about too much is, in fact, there’s a song
that comes into my mind and it’s by Seal. – Oh no. – And he – We’re never gonna survive? – Uh, yeah.
– (laughing) – But the um, the line was, it’s the
loneliness that’s the killer. What are your thoughts on,
you know, being a solopreneur, – So many. – Being alone, you know, in business? – I can say definitively, and unqualified-ly, that starting our business,
and becoming a parent, were two of the most lonely, isolating experiences of my life. They didn’t stay that way, but
for lots of similar reasons and some different reasons, it feels like a very very lonely time. And in some ways they are
similar, because you are sort of, birthing something new,
sometimes it’s a business, sometimes it’s a human being. But what has been hugely
powerful and instrumental to me, to keep the motivation, to not
feel so alone and isolated, is to either create a
community for yourself, or tap into a community that existed. – Yep. – So, you know, taking becoming a parent, having, especially in
those first six months, the NCT community, was a huge lifesaver. It took all of the, or
a lot of the anxiety and feelings of loneliness away. Similarly in a business, there are so many either networking groups, or
incubators, or hub spaces, coworking spaces, whatever
it is, that you can just naturally plug into, and
some of it will be, you know, trial and error, see what
works for you and what doesn’t, ’cause they’ll have different cultures, but if you don’t have
anything preexisting, then create it for yourself. – Yeah. – It’s the best thing that
I have done for my business and my sanity is creating
those communities for myself. One was literally just a
WhatsApp group with two friends who were also business founders
and we just shared a lot of values and interests and other things, and we just texted each
other, no sort of rules or process, it’s just like
hey, this is something really I’m struggling with,
what do you guys think, or what’s some advice you’ve got, and they’ve, literally, just
by being friends who get what I’m doing and what we’re building, have been able to give
some really valuable advice that takes the loneliness away, similarly, entrepreneur
community that I’ve created is to serve a similar itch, of like to help other woman founders
who are feeling lonely and want to be plugged into
women who are founders, who are, you know,
understand what it’s like to start a business, and
can help with both practical and also sort of, a moral support. – Yeah. That’s some really good stuff there. I can’t answer that,
you know, ’cause there’s so much good content that
you should share there. – Yeah. – I think the other thing, you
know, in terms of, you know tips in terms of running a business, is you know, is just to
recognize that, you know, you can’t be all things to all people. – No. And nor should you be. – No. I think, you’ve probably
done things like (mumbles) – Yep, yep. – On YouTube. So, in these profiles, it doesn’t
matter which ones you use, – Yep. – You usually find that
you’re strong in maybe – Yep.
– One or two areas. And then there’s some blind spots – Yeah.
– That you maybe have. So I guess one of the things
I’ve really learned to do is sort of double down – Yeah, yeah.
– (mumbles) say on the strengths? – Yeah. – And then bring, they call
it wing man, or you know, wing man is the term. – Yeah, wing people. – Wing people, yeah
– (laughing) – Wing people.
– Yeah. – Around you, who can perhaps, you know, blunt those (mumbles)
– Yeah, definitely. – That way you’re not so strong, so – Yep. – That’s something I’ve
really zoned in on, – Yeah. – ’cause a lot of people
say work on your weaknesses. – Yeah. – But I think if you double
down and focus on your strengths and you kind of go with the flow, – Yeah. – And then you can bring people along side who are good and enjoy all the stuff that you don’t enjoy.
– Exactly. And that’s one of the things
that I think is so hard as just human beings, we’re
taught from a very young age to work on your weaknesses,
to always practice so you can get better at
stuff you’re not good at, and obviously, you know,
some of that is true and very very important, but
at this point in your life, when you’ve reached
whatever age we’ve reached, you are sort of who you are. And you know intuitively
what you’re good at, and what takes a bit more effort. It’s not necessarily a weakness, it’s just it takes more
effort or it’s not sort of your happy place or your flow. And I think, as your said,
there’s so much more leverage and so much more power
in really doubling down and investing in what you’re amazing at, and just delegating the
rest, or finding other people to do the stuff that are your blind spots, because they actually enjoy it. – Yep. – You know, it’s not like
you’re taking all of the things that you hate and somebody else hates it and they just have to sort of do it, there are people who love bookkeeping, I don’t like bookkeeping,
there are people who love it, and like when we found our
bookkeeper, she was like, oh give it all to me, I
love cleaning up the mess, and I was like okay, here’s
a great big list, you know? – (mumbles) – Yeah, but that’s the
thing, we sort of think that everybody’s like us, and
some things we love and hate other people will love and
hate, but that’s not true. – Yep. – You know, through profiling, whatever you wanna use, – Yeah.
– You can find people who love to do the things
you don’t like to do, and then everybody’s happy,
so it just sort of make sense for lots of reasons. – Yeah, there’s so much good
stuff we’ve spoken about there, I think we’ve probably been
given a queue in terms of timing – Yeah.
– Recently, I don’t know if you’ve got any sort of parting comments or top tips on in this
whole area (mumbles), I’m throwing that on you, – I know. – So you don’t actually have to, and I’m thinking desperately
myself what I might wanna add to that, but
it’s only if you’ve got any – Yeah. – ’cause you’re probably
quicker thinking than me Ruple. – Well, I think the key really is to just embrace the process. There are so many times when
it’s going to feel lonely, it’s going to feel frustrating,
it’s going to feel ecstatic and really really exciting, you’re gonna take over the world, and just to know that these
highs and lows are normal. – Right. – It’s not that you’re a
freak, it’s not that you’re doing anything overly
right or overly wrong, genuinely starting a business,
whether it’s a property or anything else, follows a very, almost predictable pattern. And, it’s again by tapping
into your community of people who are in it as well that you realize that it’s not just you, you know, – Yeah. – That other people are
in it, and they can help give you that perspective,
so my main thing again, sort of it gets back to
something we talked about in another video is be very
conscious of the five people you surround yourself with the most. Make sure that they are
people who understand you, who share your values, who are
going to push your forward, to push you higher, and
help you be the best version of yourself, both in life and in business, as you possibly can. – Well, you know, one
of my favorite people, I don’t watch a lot of, like, reality TV, but one of my favorite
people is a guy called Marcus Lemonis, I don’t
know if you know this, – No, I don’t know him. – You don’t know him. He’s American, you know of
course you know all Americans, don’t you.
– All Americans are great. – But on Marcus Lemonis, and he basically, I think the program
he’s titled differently, in different places, but I
think he’s called the prophet, not the prophet, but the prophet. – Yeah. Oh interesting. – And he says, trust the
process, as you would say. – Yeah, yeah. – And when you said that,
it really reminded me. In fact, I’ve adopted that phrase – Yeah. – When I talk to my apprentices,
I’ve got some apprentices who I work with, and we start
on day one we got to day 100. – Yeah. – And you don’t know what
you’re gonna be like in day 100, so you have to go for the
process, this process. – Yeah. – So trust the process,
same as with business. – Yeah, I agree. – So, I’ve stolen your line as well. – That’s okay. – I guess the thing is to treat it like a grown-up business, so, you know, have formal systems and processes. Delegate, you know, allocate time. – Yeah. – Have a strategy, that’s
written down somewhere, – Yeah. – And you know, focus on your strengths, – Yes. – Bringing people, and have enough profit to be able to pay for
these things as well. – I agree. And I would say sort of (mumbles) is like with the stuff that I do,
like whether it’s (mumbles) or whatever, it’s to make
sure that there’s always an element of a reality
check, and a practical aspect to what we talk about,
because again sort of starting a business,
being an entrepreneur, it sounds very lofty
and exciting and sexy, but there’s a real life practicality, you have to pay the
bills, you have to eat, you have to have some
shelter, and to be able to pay some rent, and so it’s
really really important that you don’t overload your business. And you are taking care
of the practicalities at the same time that you are taking care of the big picture and the vision. – Well, you know, that’s amazing. I don’t think we should
add any more to that on this particular occasion,
but you know, to be honest, Ruple, it’s been great
chatting to you, today. – It’s been so much fun, Richard. – Aw, thank you for joining me today – It’s my pleasure. – We’re experimenting, I’m
looking at the camera here and just if you like
what you’re seeing today, two smart buddies, just having a chat. If you like it, leave a
comment in the comments box, whether it’s whoever’s channel
it is you’re watching it, and is there anything
you wanna hear from us? – Let us know.
– Maybe, you know, ’cause we had a few ideas
about what we’d share. – Yeah. – Maybe our audience
might have other things that they’d like us to share – Yeah. – We are (mumbles) to do it again, would you like to do it again? – I would love it! – (laughs) You’re on camera, so you’re gonna say that, are you? But maybe we should close for
now and go and get something to eat and drink and relax a bit. – Perfect. – Does that sound good? – Yep, sounds great. Let’s do it.
– Okay, two smart buddies, that’s it for now. Thanks for watching.
– Thanks guys. – It’s not just a problem. (laughs) – Yeah exactly. – After I went to this
webinar (clears throat) I was literally, my throat was so dry, geez, it was just an hour and a half. All right, let’s do it. – (mumbles) your voice to rest up tonight.

Bridgewater’s Ray Dalio Discusses the Impact of China’s Growth on the World Economy


I’m Jim Haskel, Senior Portfolio Strategist. I’m here with Co-CIO Ray Dalio. And the subject today is China, and Ray, you’ve been going there since 1984; a lot of experience. China in the news today in many different regards. Can you walk us through a little bit about your experiences and how you’ve seen China evolve over the last 35 years? I’ve been able to go to China since 1984 and participate and see the evolution, yeah. And it’s been quite something. You know the first time I went, I was invited by CITIC, which was called a window company then, which was the only company that was allowed to deal with the outside world, and they were curious about the world financial markets. So I was invited there. At the time uh the city was mostly hutongs, which are small neighborhoods, poor neighborhoods. And I remember speaking in their office building, called the Chocolate Building, and looking outside, and we were talking about opening up. And at the time, I knew what opening up would mean, you know? The rest of the world had a cost level that was here, and China had a cost level there, and if they could eliminate their inefficiencies, it would go like this. And so I looked out there and I said, you know, you’ll see those hutongs become replaced by skyscrapers and so on, and they told me that, you don’t know China. But that force, and their character and the creativity that they exhibited took them to what is the greatest economic miracle of all time. To put that into perspective, per capita income since then increased by 26 times. The share of world GDP went from 2% to 22% today, so it’s a comparable power to the United States. The poverty rate went from 88% to less than 1% and the life expectancy increased by 10 years. There are many, many others; in capital markets, very big changes. But I never went for making money; I went for curiosity, you know? And that curiosity brought me in contact with the Chinese people, who I really, really came to love and admire. The character of them, the type of relationships that they valued; all of those types of things. And I could see that character and I was able to, over those years, build friendships; I was able to contribute in some small ways to the development of the financial markets and see it. And I remember these people; I’ve a great old group of friends who were the first pioneers to set up the stock market there. They were seven companies—each had a representative. And it was in a dingy hotel, and these people were to form the stock market and the financial markets, and so it evolved. And that evolution was an intimate evolution, in which I brought my family, I brought my kids. I remember bringing my son Matthew when he was very young along, and we would go in and we’d have meetings and they would bring cookies and milk and he’d be there. And he ended up going to school there when he was 11; it was a whole different world, he lived there. And that whole different world, just to give you an idea of the technology— you know where they are in technology now, which is comparable in many ways to the United States. When I went, I would bring them as gifts $10 calculators that they thought were miraculous. So I’ve gotten to know the people—I go there because I like and admire the people, and I’ve done that for 20 years or more before we ever did anything commercially. And so we’re sitting in a time now where China has evolved in a big way. And I wonder, just from your perspective now that, as an American who’s gone to China for years and years and years, how do you make sense of this growing conflict that you’ve written a lot about, between China and the United States? What do you think is the root cause of that? Well, it makes total sense in a historical context. You know, I’ve been studying economic history— I used to study what the last 100 years is— and recently because I wanted to study the rises and declines of reserve currencies, I’ve studied the last 500 years carefully and looked at the last 1,000 years. And what I’ve seen over and over again is that when there’s a rising power challenging an existing world power, that there is going to be a conflict. And there’s a global world order. And the way that usually happens is there’s a conflict, and then there’s a war, quite often, and then after the war, whoever wins the war gets to set what the global world order is. And then you have a period of peace, because no country wants to fight that country until there’s a rising power challenging an existing power again. That’s happened 16 times in the last 500 years, and in 12 of those times, there’ve been wars and sometimes you get around them. I’m not saying that there’s going to be a war, but I think it’s a natural development in terms of China growing, expanding. You know, we have a small world and it’s a big country, and we’re going to bump into each other, and so it’s that natural conflict. And then the question is, you know, how it’s best dealt with. But I think it’s just a natural evolutionary step. And you’ve sort of put the framework around this where trade is just the symptom of this broader conflict; whereas trade is always in the financial news, but it’s really just one symptom. There’s also, you know, military posturing—there’s other elements of this whole conflict. Sure, history has shown us that there’s this pattern—I’ll describe the pattern. We’re now living in a US dollar reserve currency world, so I want to look at the US dollar and the US empire. Before that I wanted to look at the UK and the British empire, and then before that I wanted to look at the Dutch empire. And I wanted to follow them in their various dimensions. So I read all of those stories—I looked through the numbers and read the stories— and I could see that the stories would repeat, the same basic stories. The charts on this page show six major measurements of power. The first is technology and education; second is output, how strong the economy is; third is trade; fourth is military; the fifth is the strength of the financial center; and the sixth is reserve status. What we did is to stitch together a whole bunch of statistics so that we can measure each one of those. And so they go back to 1500 and you can see the cycle repeat over and over again. This next chart shows the averages of these rises and declines by each of the factors, and I think they tell the story pretty well as to what a classic rise and decline of the empires and reserve currency status is. So for example, the Dutch back in the 1600s—late 1500s and early 1600s— invented ships that could go all around the world. And because Europe fought a lot, they put arms on the ships and then they could go all around the world, and the world was their oyster. So they could bring back great things, and they then increased their share of world trade to be 50% of world trade. And when they went globally, through their businesses, Dutch East Indian Trading Company, they had to be enabled with military to protect their trade routes, and they developed financial empires. So as a result, we saw not only trade grow, we saw the military grow; we saw them carry their reserve currencies around, and because they were used so commonly, they became world currencies, and that’s what made them world reserve currencies. And as a result, they also developed financial centers; because of developed capital markets, money came around the world to invest through those capital markets, in those currencies, in those businesses that were their businesses and other business, so they developed financial center; Amsterdam was the center of world financial markets as a result of that, and as a result they built their trade and their commerce together. They quite often— then over a period of time, there were forces that led to their decline. And those forces were typically a combination of higher levels of indebtedness, others gaining competitive advantage—for example, the Dutch shipbuilders were hired by the English to learn how to build great ships that would carry them around the world, and there was a change in technology. And there was really not much of a difference between the businesses, the technologies, and the government in terms of making those things happen. For example, the British East India Trading Company had a military that was twice the size of the British military, and they were the ones that conquered India, and so on. I just put together the averages of those forces so that you could just see, let’s say, the average of power, and it goes back to 1500 And you could see the blue line is the United States, and you could see its rise and then its relative decline. And you could see the emergence of China to be almost a comparable power. And you look at that red line over a period of time, and you could see going back to 1500, that China was always one of the either the highest, most powerful country, or one of the most powerful countries, until they had the decline from about the 1800 period. But you could see that emergence. And so to me, this is all very classic. Mm-hmm. So now, if you bring this back to the current conflict between the United States and China, what I think is so interesting is that you also believe that global investors must look at China and explicitly start to consider whether China should be part of their portfolios. And so it seems kinda interesting—we’re talking about an emerging conflict, but we’re also simultaneously talking about there’s really some merit for China to be a component of a global portfolio. So give us your perspective on that and why. So think about it. Would you have not want to have invested with the Dutch in the Dutch empire? Would you have not want to have invested in the industrial revolution and the British empire? Would you have not want to have invested in the United States and the United States’ empire? I think it’s comparable. Would you have not want to have invested in those places? And look at the growth in the markets. Over the last 10 years, the stock market in China has increased by—market capitalization by a factor of four. The bond markets, combining both the government and corporate bond markets, have increased by a factor of seven. And they’re each the second largest markets in the world. And I have had plenty of contact with those markets and with those people, the regulators and so on behind them, and I have you know a lot of admiration for that. So I also believe in diversification, yeah. I believe that China’s a competitor of the United States or Chinese businesses will be competitors of American business or other businesses around the world, and that you’re going to therefore—you wanna be, if you’re diversified, having bets on both horses in the race. And then I think from investing over the years, I’ve been doing this for a long enough period of time to know that there’s a tendency of bias not to do the new things. Like when I first started, we were at the end of the era where pension funds invested mostly in bonds. OK, then, then they thought it was bold to go to equities. Then they thought it was bold to go to international equities. And a lot of people argued against going to global equities. And so on. Emerging markets equities and emerging markets—all of that was considered to be bold. And so the thing that people haven’t yet done seems like the big risky thing where, in my opinion, going where the growth is and also having the diversification is a smart thing to do. So when you considered the merits of that, even if you agreed with what you’re saying, is now the time when the trade part of the conflict may be getting even more serious because we’re moving from tariffs into things like supply disruptions, and export interruptions, and prevention of particular exports. Is timing an issue or do you ignore that completely? Well, the markets as you know are always discounting timing, right? You have a new, good thing happens and the markets rally; you have a bad thing that happens and the markets sell off. And so the markets kind of reflect, broadly speaking the ebbs and flows of the good and the bad. And so if you wait for everything to be, you know, crystal clear, everything’s going to be terrific, you’ll pay a higher price than if you don’t. I think the real question is are we going to go to war. If we go to war, then we’re in a different world. I don’t think we’re going to go to classic war. I do think there’s going to be a restructuring of the world order in terms of changes in supply chains. There’ll be changes in who’s making what technologies; important changes and sort of those things. But I don’t think that that’s going to mean that there won’t be the evolution of China, the evolution of the United States, and I think that that diversification is good. So yes, I would say that now is the time. The reason now: now’s the time that it’s opening up. And you could be early or you could be late. I think that, you know, it’s better to be early, because as you know the inclusion in the MSCI indexes and other such things are meaning that they’re opening up and that will accelerate. Those percentages will keep rising. And so do you want to be early or do you want to be late? It’s better to be early than it is to be late, and I think also it’s a time for diversification. Ray, investing in China can be a risky thing to global investors. That’s the way they perceive it. How do you think about that relative to the other risks they’re already carrying in their portfolios? I think that every place is risky. So we’re talking about relative risk, OK? I think Europe is very risky, when monetary policy is almost out of gas, and we have the political fragmentation, and they’re not participating in the technology revolution. And I can go on and on as to why I think Europe is very risky. I think the United States is very risky in its own ways. Having to do with the combination of the wealth gap, the political system, the conflict between socialism and capitalism that will be part of our election, the fragmented decision making—so many different things, and the absence of the effectiveness of monetary policy when we get to be operating that. I think emerging markets in their own ways have their own distinct risks. And I think that China has its own particular distinct risks, which are all different. And I think, when I look at it, I think that it’s less or no more risky in the totality than other markets, and I think what is most risky is not to have a good diversification of markets. In addition, the Chinese have more ability to deal with monetary and fiscal policy relative to the United States. I’m not saying everything is a plus. There are pluses and minuses. But as you know, one of my big concerns— and I’ve got a number of big concerns about the West, the United States, and some of the issues that are facing the western economies— and among those are the inabilities of central banks to be as effective when interest rates get to zero and quantitative policies, quantitative monetary easing, is not as effective. So let me pause on that and touch on that. If you look at the difference in interest rates to zero and the capacity of fiscal policy to be coordinated, they have a lot more room to be managing those things, and they are managing. I mean if we, I dunno how long I’ve heard everybody say, OK the debt problem is going to be a problem there and so on. Again, I’d suggest you read the dynamics in my book about the nature of debt and what countries can do when the debt is in their own currency. I also think that not investing in China is very risky. I mean, think about it. Here we are in the early part of the 21st century, and there’s this emergence of China. Do you really want to make the decision not to invest in China and not to be there in the future? Look, I believe every place is risky. I am very risk focused. I tend to see things that are going to go wrong. I have an inclination to do that. So I think that every place is risky, which is why I like the notion of diversification. I just want people to see China objectively. I know over this past number of years, I have been pro-China, very bullish on China in its various ways. And people say, you know, why are you so bullish on China? And I know it’s very controversial to be, particularly at this time, to be very bullish on China. And I just want to let you know that I’m sincere, OK? I’ve been there, Because I hope you know that by now that my main objective is to be as accurate as I possibly can, Yeah, I really admire what is being done, and I wanna be a part of it, and I think our investors should be a part of it. I want to ask you about the best way to actually invest in China. What we see is that most of the portfolio flows go to either the private equity markets or the public equity markets, and that’s a little counter to your framework of how you invest across time and throughout the world. How would you think about best approaching the Chinese markets, as a new investor? Well, I wouldn’t think of it as being any different than being in any other place. The public markets and the liquid markets are going to allow all the advantages that they allow, and the private markets are going to allow all the advantages that they allow. The public markets are going to provide the liquidity, the diversity, the ability to move positions around and rebalance and so on, which is very important to us. And then the private markets, let’s say the venture markets, expose one to the new technologies and the energy that’s happening in terms of entrepreneurship and young technologies there. And I think that’s important. I think there’s an awful lot of money that is chasing those venture capital investments, and then I think there’s a whole lot of opportunity. I would say it’s a reflection really of how that country has changed, wow, from my $10 calculator days and to see what the mind-blowing technologies are. To put that in perspective, they’re now the #1 country in fintech, #3 in AI and machine learning, #2 in wearables, #2 in virtual reality, #2 in educational technology, #2 in autonomous driving, and they are running fast to be #1 in those industries. They now account for 34% of unicorns in the world, by comparison to 47% in the United States and only 19% in the rest of the world. And that’s when they start as unicorns. If they take the share of unicorn value, it’s 43% versus 45% in the United States and only 12% in the rest of the world. So if you’re looking at venture, I think you’ve got to be there. So I think it would be important not to miss out on those. As far as the public equity situation it’s analogous. You could see the market capitalizations accelerating in the stock, bond, corporate bond markets, all of their instruments, and you could see the foreign flows coming in at an accelerating pace. You can expect those markets to be bigger than the markets that we have in anywhere in the world, with time, and they will serve a similar purpose. So as far as let’s say the legal regulatory system, it’s advanced, but it hasn’t advanced as much as some of the developed countries. But it is more advanced and developing at a fast rate than most of the emerging countries. And if you deal with the question of whether it’s a more autocratic system and whether you prefer a more autocratic leadership system than a democratic leadership system, you’ll have to make that choice for yourself. don’t look at it as some unique place in terms of some of those impediments; look at the whole picture. I would say that the Chinese or Confucian way of approaching things has a lot to be said for it. So, you have to make your own choices. Let’s get back a little bit to some of the questions that investors have. For example, should they think of China as an emerging market investment? Should they think of it as a developed market investment? Something in between? In terms of the expected return-risk correlation of that investment— you talked a little bit before about diversification—but what about the expected return and risk of an investment in China and how would you structure that? When you ask me the question of is it more like an emerging country or more like a developed country, so many different aspects of what defines an emerging country or a developed country’s market vary, OK? So, they race down—what is the size of the market capitalization? What is the legal form? What are property rights? Just so many different dimensions. But I would make as a generalization that China is somewhere between 60 or 70% more like an emerging country in those respects than it is like a fully developed country. But it doesn’t have a regulatory system that is as developed as the developed countries that have been at it a while. It doesn’t have some things It has market capitalization, it has liquidity, and that’s a two-edged sword. It has also greater levels of inefficiency. So the greater levels of inefficiency provide investment opportunity. So, as a generalization, I would uh describe it that way. If I’m looking at it instead in the question of expected returns and risk, I think as you know, I look at each market and I look at the return relative to the risk, the expected return relative to the expected risk, and the past return relative to the expected risk, and what drives it. And by and large I find developed markets and emerging markets roughly comparable, and that being able to put together portfolios of those in an effective way is the way to engineer that portfolio. So when I look at China, I think that the expected return relative to the expected risk will be equal to, or perhaps higher, than elsewhere. Partially because of the fact that there’s the diversification that you could have and put together well, but also partially because of the greater capacity of the central banks, the central bank I should say, in being able to ease monetary policy and also run fiscal policy to be able to have higher ratio, and I think that that would be a plus. You’ve traced the arc over the last 35 or so years of China’s history and described the evolution. If you look now forward 5, 10, 15 years, what do you think the highest probability— what will we be looking at when we look at China’s evolution? We’ll be looking at a very different world, and we’ll be looking at a very different China, and we’ll be looking at a very different United States in 5, 10, 15 years. In some ways that we will never be able today to anticipate and in some ways that are inevitable, in kinda the same sort of ways that demographics is inevitable. The following charts probably help to answer your question. They show a number of statistics, including the sizes of the economies, the relative sizes of the economies, the relative shares of world trade, the shares of the global equity market capitalization, the shares of the global debt market capitalization, over the next number of years. These projections are based on our 10-year forecasts that look at a lot of indicators to determine what the next 10 years’ growth rate is going to be, likely to be. They’re based on the relationships between those types of growth rates and changes in market capitalizations, and also work that’s now being done to develop the market capitalizations and open those economies. They’re not going to be exactly accurate, but they’re gonna be probably pretty much accurate. You know, so in a nutshell, it’s going to have the largest economy in the world, the most trade in the world, the most market capitalization in the world. Mm-hmm. Those are big changes. Yeah. And the United States, and Europe, and Japan, and emerging countries are going to have big changes, too. You’re sketching out a continuation of some dramatic trends that have already taken place. Any threats that you see to that progress going forward? Well, I mean there are always threats. I think the threat is the threat of conflict with the United States in whatever form that will be. There are always threats, you know? And they have to do with probabilistic things. You can have threats that’ll affect our countries in terms of anything from climate change issues, pandemics, political disruptions. There’s that whole range that can affect any of those countries, right? Ray, we’ve covered a lot. We’ve talked about the evolution of China, the opening of the capital markets, how to think about it from an investment point of view. I thank you for your time and perspective, and I look forward to sitting down once again and updating this in the not-too-distant future. It’s my pleasure. It’ll always be interesting.

Why it’s too hard to start a business in Africa — and how to change it | Magatte Wade


Today, what I want to share with you
is something that happened to me, actually, around four
weeks ago, it happened. Words were said to me that I never thought
I would ever hear it said to my face by another human being. And those words, they shattered my heart. And at the same time,
they filled it with so much hope. And the whole experience
renewed my commitment to the idea that I came
to share with you today. You see, I tell everyone
that I am a haunted person. What haunts me is the impossible stories, story after story after story after story of young people, my people, people like me dying out there on the ocean, right now,
laying at the bottom of the ocean, serving as fish food. Do you really think
that’s the best we can do? To serve as fish food? And for those of them
who are trying to migrate to Europe — because that’s what it is all about, they are trying to migrate
to Europe to find a job. Going through Libya. Do you know what happens to us
when we’re trying to cross through Libya and we’re trapped over there? Well, we’re being sold as slaves. For 300 dollars,
maybe sometimes 500 dollars. Sometimes I hear stories
of bodies that fall off an airplane. Somebody hid in
the landing gear of a plane or in the cargo section of a plane, and then you find them frozen to death. Wouldn’t you be haunted if, like me,
from the moment you were a little girl, you hear these stories
and they keep repeating themselves, over and over and over? Wouldn’t you be haunted? That’s my case. And at the same time, you know,
as my people are dying, my culture is also dying. There, I said it. Because, you know,
we have this culture inferiority, which means that anything
that comes from us is not good enough. But you know, in my situation, and because I was raised to criticize
by creating, it’s Michelangelos. My father said, “Do not
come to me with problems unless you thought
of a couple alternatives. They don’t have to be right, but I just want to know
that you thought of something.” So, I have this attitude in life —
something is wrong, find a way to fix it. And that’s why I start
the businesses that I start, that’s usually consumer brands, that have embedded in them
the very best of my African culture. And what I do is it’s all packaged,
21st century, world-class tendered, and I bring that to one of the most
sophisticated markets in the world, which is the US. First company was a beverage company, second one is a skin care company,
third one is launching next month, and they all have that in common. So, why are these people leaving? They’re leaving because they have no jobs. They’re leaving because
where they are, there’s no jobs. So … But poverty, that’s really striking them,
is the root cause of why they’re leaving. Now, why are people poor? People are poor
because they have no money. You have no money
because you have no source of income. And for most of us,
what is a source of income? For most of us, what is our
source of income, what is it, tell me? Jobs, thank you. Where do jobs come from? Come from where? Businesses, thank you. Now, if jobs is what fixes poverty, and jobs come from businesses, don’t you think — especially, they come from small
and medium size enterprises, SMEs — then don’t you think, maybe for a second, that we should focus on making it easy
for a small-business person to start and run their business? Don’t you think that it makes sense? Why is it that when I look
at the Doing Business index ranking of the World Bank, that ranks every country in the world in terms of how easy or hard
it is to start a company, you tell me why African countries, all 50 of them, are basically at the bottom of that list? That’s why we’re poor. We’re poor because
it is literally impossible to do businesses
in these countries of ours. But I’m going to tell you exactly
what it means on the ground for someone like me. I have a manufacturing
facility in Senegal. Did you know that for all my raw material
that I can’t find in the country, I have to pay a 45 percent tariff
on everything that comes in? Forty-five percent tariff. Do you know that,
even to look for fine cardboard to ship my finished products to the US, I can’t find new, finished cardboard? Impossible. Because the distributors
are not going to come here to start their business, because it makes no sense, either. So right now, I have to mobilize
3000 dollars’ worth of cardboard in my warehouse,
so that I can have cardboard, and they won’t arrive
for another five weeks. The fact that we are stifled
with the most nonsensical laws out there. That’s why we can’t run businesses. It’s like swimming through molasses. So, what can you do about that? I told you today that someone
said to me words that marked me, because I explained the same thing
to my employees in Senegal. And one of them started crying —
her name is Yahara. She started crying. I said, “Why are you crying?” She said, “I’m crying
because I had come to believe — always seeing us
represented as poor people — I had come to believe that maybe,
yes, maybe we are inferior. Because, otherwise, how do you explain that we’re always
in the begging situation?” That’s what broke my heart. But at the same time that she said that, because of how I explained
just what I explained to you, she said, “But now, I know
that I am not the problem. It is my environment in which I live,
that’s my problem.” I said, “Yes.” And that’s what gave me hope — that once people get it,
they now change their outlook on life. Here, what are some
of our solutions, then? If jobs is a solution, don’t you think, then,
that we should be simplifying the business environment
of all of these countries? Don’t you think? And along with you, I would like for all of your friends
from the other 50 countries that are on the bottom of that list
to do the same thing. You do that, we do the rest of the job. I’m doing my part of the game,
what are you doing? (Applause) What are you doing? (Applause) What are you doing? (Applause) And as for you,
everybody here in this room, I leave you with two marching orders. Get in the game, and the way you get in it
is educate yourself, build awareness around yourself, and then also advocate
for e-government solutions. He said, “Oh, corruption,
how do we fight corruption?” Well, as a matter of fact,
I’m here to tell you that yes, you can do it
by the stroke of a pen. You do not need anyone to tell you
when and how to do that. It is one thing, actually, that you don’t need to wait
for anyone to do, so do it. Otherwise, don’t come and tell me
that you want to fix corruption. You and your other 50 friends
from the other 50 countries that are at the bottom of that list. That’s how you fight corruption. If you were only charging me 5 percent
to get my stuff in the country, my raw material, instead of the 45 percent, do you really think
that I would have to go a pay a bribe? That’s what breeds corruption. Bad laws, sets of horrible, nonsense laws. (Applause) (Cheers) Right? (Applause) You want to fight corruption? That’s what you do. And again, remember,
you don’t need to wait for anyone. You can do that by yourself. Unless you’re telling me
that maybe you have no sovereignty, and that’s a whole other problem. OK, so, from here on,
I have simple words for our “leaders.” This can go two ways. It can go the nasty way, because we have hundreds
of millions of young people coming to life right now, here, and if they don’t have an outlook in life, they are going to go for a revolution. They’re going to go for violence. And none of us wants that. None, none of us. That’s the one way it can go. Or the second way it can go is, all this happens peacefully, productively,
and everything is good, and you do what you need to do,
you get out of my way, you let people like me do our job,
we create all these jobs we need, and then Africa becomes
this very prosperous country that it’s designed to be,
it should have been for a long time. It happens like that, everybody’s happy,
we move on with our lives. It can happen in two ways — pick violence or you pick
the calm, productive way. I want the calm, productive way. None of us should ever,
ever even try to think about what else could happen
if we don’t go there. So, please. And the time has come. This type of picture — prosperity,
happiness, human flourishing — that’s what I see if we do our job. Thank you. (Applause) (Cheering) Thank you. (Applause)

How Negative Yields Work | WSJ


(gentle music) – [Narrator] This chart shows the yield on the German government’s 30-year bonds over the past few months. You’ll notice something unusual
happened in early August. The yield dropped below zero. A yield is the return
investors receive on a bond. A negative yield is the
opposite, meaning investors are receiving less money
than they originally paid. Negative yields are a
relatively new feature in the world’s bond markets,
but they’re appearing with increasing frequency. Globally, around $16
trillion worth of bonds currently carry a negative yield. Bonds are one of the safest
investments on the market. They’re staples of many
investment portfolios, from pension funds to retirement accounts. Investors like them because
of their reliable returns. So how did some bond yields go negative? And why would investors
keep putting their money in assets with negative returns? To understand negative yields, you need to understand how bonds work. Bonds are a form of debt that governments and companies issue for
various lengths of time. A bond’s lifespan can
range from a few weeks to a few decades. Bond issuers make
regular interest payments to bond holders over the asset’s lifespan. This is known as the coupon rate. But bonds are often bought and
sold on the secondary market. Their prices fluctuate, which affects what an investor can expect to earn. The yield is a calculation
of how much an investor can expect to make from
holding onto a bond bought at a particular price for a
particular length of time. The yield of a bond is
inversely related to its price. High demand in the bond
market drives up prices and drives down yields. This is largely why yields are negative. Right now, the bond market is experiencing unusually high demand. There are a few reasons for this. The first is that investors have grown increasingly concerned
about the lack of growth in the global economy. Amid low inflation, political uncertainty, and trade disputes, investors
are putting more money into safer assets, like bonds. The second is that several
central banks around the world have set their interest rates below zero. Central banks are banks
for commercial banks. So when they set negative
interest rates, commercial banks must pay them for the privilege
of holding their money. This incentivizes commercial banks to lower the interest
rates they charge to. So far, commercial banks
have been reluctant to pass that negative
rate to average consumers, but some have passed on
the cost to companies and large institutional investors. Negative rates give investors
an incentive to buy bonds rather than park their money at a bank. This drives up demand. These factors have
pushed bond prices higher and driven down yields, so
much so that they are now in negative territory and,
in some cases, even below the negative rates set by central banks. So why would investors
continue to buy bonds with negative yields? Well, if demand continues
to rise, buying now means potentially selling bonds
later at a higher price. This can help offset
losses in the short term, but the long-term implications
of negative yields could mean lower returns on pensions
and retirement accounts, meaning workers might have
to save more and work longer. Negative bond yields, and
negative interest rates in general, are viewed
as a short-term remedy to get economies moving. But with the footprint of
negative rates getting deeper and wider, investors worry
that they may be less of a temporary fix, and
more of a permanent fixture in the market. (gentle music)

What is Market Economy?


Welcome to the Investors Trading Academy talking
glossary of financial terms and events. Our word of the day is “Market Economy”
Market economies work on the assumption that market forces, such as supply and demand,
are the best determinants of what is right for a nation’s well-being. These economies
rarely engage in government interventions such as price fixing, license quotas and industry
subsidizations. While most developed nations today could be
classified as having mixed economies, they are often said to have market economies because
they allow market forces to drive most of their activities, typically engaging in government
intervention only to the extent that it is needed to provide stability. Although the
market economy is clearly the system of choice in today’s global marketplace, there is significant
debate regarding the amount of government intervention considered optimal for efficient
economic operations. An economy in which the greater part of production,
distribution, and exchange is controlled by individuals and privately owned corporations
rather than by the government, and in which government interference in the market is minimal.
Although a total market economy is probably only theoretically possible (because it would
exclude taxation and regulation of any kind), capitalist economies approximate it and socialist
economies are antithetical to it. Market economies are also called free economies, free markets,
or free enterprise systems.

Perth’s Top 5 Areas for Growth in 2020


– Want to know the top five
Perth areas for growth? Well, the Perth property
market is undeniably in recovery now, so stay tuned as I share the top five areas for
growth for 2020 in Perth, but first, let me introduce myself. G’day, guys. My name is Tim Guest. I’m Australia’s leading financial educator and the founder of Infinite Wealth. Welcome to our #JustAskTim video series, where you can get all your
questions answered on anything finance, real estate,
investment related, and more. Now please like, comment,
and share this video, and if it’s your first time
tuning in, welcome along and thanks for joining us. And don’t forget to follow or subscribe wherever you’re seeing this. So, the Perth recovery is back on track, having faltered in the lead-up
to the federal election. Like many locations across
capital city Australia, Perth paused amidst the
uncertainty created by the election and the prospect of a Labour victory and major changes to property taxes. Tighter finance and a highly
negative media also contributed to putting the brakes
on the Perth recovery in the lead-up to the election. Or, sorry, my correction, the Spring 2019 Price
Predictor Index published by Hotspotting shows the decline has likely bottomed out
with, well, firstly, almost 30% of Perth suburbs
having recorded growth in their median prices
in the past 12 months. Also, a steady number of suburbs with increasing sales volumes. There is also an improving number of markets with steady sales volumes and now, very few markets at all with declining sales volumes across Perth or Perth metropolitan area. This also comes as vacancy rates continue to tighten and rents rise. Now, mid-October data from
SQM Research showed that the Perth vacancy rate
was continuing to fall. In 2017, the rate was close to
6%, but now 2.9% and falling. Now, SQM Research also
reported solid growth in Perth rentals, with the rents index up in annual terms for both
houses and apartments. This source also recorded
short-term improvement in the city’s prices index and that’s been confirmed by
the latest Domain price report published in mid-October. As they’ve recorded in several
of their previous surveys, the recovery in the Perth
market, after several down years, has been dominated primarily by four local governmental areas, so Joondalup, Stirling,
Wanneroo, and Melville. Now, their spring survey confirms that this is still the case. So heading our top five areas in Perth for growth is the suburb of Heathridge. Now, an uplift in sales
activity in the past 12 months means the Joondalup local government area is the leading precinct in Perth for the number of suburbs
with growing buyer demand. Also, a steady performer
in the property market and leader of the Perth recovery, Joondalup will have its prospects boosted by two significant projects. Approval of the marina and waterfront tourist/retail
project has been accompanied by plans for the Boas Place project, which is a mixed-use
development of office, hotel, retail, and residential elements. Now, Joondalup is also an
area with strong amenities, services, and good road
and rail links to the CBD. Recognised by the state government as the main strategic metropolitan
centre in northern Perth, its healthy economy is boosted
by strong population growth. Joondalup offers a pleasant
waterside environment with Lake Joondalup, while being within easy reach of the ocean and the beaches. Now, for property investors, it has the important
quality of major education and medical facilities, which provides a steady pool of rental demand. At a time when the Perth market is moving into recovery phase after several years in decline,
the Joondalup precinct has several growth suburbs which offer the opportunity to buy well
ahead of future price rises. Heathridge is a well-located suburb where buyer demand is now rising strongly. So next up is the suburb of Karrinyup. So big things are happening
in the City of Stirling, where Karrinyup stands
out as one of the most sought-after residential enclaves and steadiest property markets in Perth. The Stirling City Centre
project is touted as being one of Australia’s biggest
urban regeneration projects and $1.6 billion is
being spent on upgrading two shopping centres, including the Karrinyup Shopping Centre. This is having a positive effect on the Stirling property market, where sales activity is strong, and that’s a trait that is
particularly noticeable. Now, in Karrinyup, which features in the Hotspotting’s Price Predictor Index as one of the National Top
50 Most Consistent Markets, Karrinyup offers a leisurely lifestyle, benefiting from its proximity to beaches, and extensive green space. It is close to the
internationally renowned Scarborough Beach, where trendy bars and cafes impart a youthful
vibrancy on the area. Further adding to the region’s
appeal are the shopping and education facilities, coupled with good transport links to the Perth CBD. Vacancies are low throughout the precinct, providing further
evidence of strong demand for real estate in suburbs like Karrinyup. Now, at number three
is the fastest growing Perth suburb in the last
12 months, Mount Pleasant. So the Perth market is
showing signs of recovery with improvements in vacancies,
rents, and sales activity, and one of the standout performers is the Melville local government area. Several of its suburbs
have growing buyer activity and some have recorded price
growth in the past 12 months. Mount Pleasant has recorded a 17% increase in its median house price and Bull Creek has grown 8%
over the last year alone. These rises are against the general trend in the Perth market at present. Suburbs in the City of Melville straddle the inner-city and
middle-ring areas of Perth. They benefit from being close to the major east-west transport corridors linking the Perth Airport
to the Port of Fremantle. They also have good
access to the Perth CBD. Two suburbs within the
Melville local government area are marked as major economic
growth centres, while Murdoch, a precinct within the City of Melville, is already renowned as a major
health and education hub. Further development is
expected in the region and the strong level of
infrastructure spending targeted on the Melville precinct
suggests this market is well placed to grow as Perth
enters the recovery phase. Now for number four, Tapping. Recent uplift in the
median price in Tapping is part of a trend taking hold in the Wanneroo local government area and across Perth generally. The Western Australian
economy is improving, unemployment is falling, and population growth is at
its best level for four years. The Perth property market is responding, with vacancies trending lower, rents rising, and prices
recovering in many areas. Against this background,
the City of Wanneroo property market is showing positive signs, with several suburbs producing an increase in median house prices
in the last three months. They include the suburb of Tapping, which has plenty of appeal
for both home buyers and investors, as it has large new homes and proximity to existing
and emerging job nodes. Over the past decade, 177,000
new residents have moved to this municipality, making
it the fastest growing local government area
in Western Australia. There’s little sign of a slowdown in the growth of this region and in support of this growth,
both the Mitchell Freeway and the Joondalup/Butler
train line are being extended while the state government
is busy building new schools. Growing industrial areas are also providing employment opportunities and with houses in most
suburbs priced in the $300,000 and $400,000 marks, properties
in the City of Wanneroo are worthy of attention by investors. Now, rounding out the top five
is the suburb of Riverton. So the City of Canning is one of Perth’s most compelling growth precincts and it’s projected to
become the home to an extra 35,000 people over the next 20 years and is attracting new residents because of its affordability. And this is leading to an uplift
in local property markets. Sales activity is rising
in some of the suburbs in the City of Canning,
including East Cannington and Riverton, providing
testimony to the area’s stronger performance
over the last 12 months. The REIWA ranked East
Cannington as one of Perth’s top growth suburbs in late 2018 and named Canning Vale as one of Perth’s top-selling
suburbs in April this year. Riverton also features among
the National Top 50 Suburbs in the spring edition of
the Price Predictor Index published by Hotspotting. There is growing evidence
of a return to price growth in several suburbs in this
precinct, including Riverton, as the Perth market shows
increasing signs of recovery. The City of Canning has particular appeal because of its proximity to
health and education precincts, and industrial employment in the Perth CBD and Perth airport. Now underway are the City
Centre Regeneration Programme and it’s expected to deliver 10,000 new homes for 25,000 new residents. And the area around the
Cannington Train Station is marked for further
residential development, while 1,500 new homes are eventually being built in Bentley. With Perth overall offering
strong levels of affordability, the City of Canning
offers considerable appeal to investors and home buyers. So guys, that’s pretty
much it from me today. Remember to like, comment,
and share this video, and don’t forget to follow or subscribe wherever you’re seeing this. Also, if you want to submit
a question or there’s a topic you’d like me to discuss in more detail for our #JustAskTim video series, there’ll be link in the
post for you to do that. Also, stay tuned later in the week for The Week in Real Estate, The Wire, where you can get all the top
stories happening this week in finance, real estate, and investment. Guys, have a great week and remember, there’s
only one thing in life that makes a difference and that’s action. See ya, guys.

🔴 Navigating Market Cycles (w/ Howard Marks) | Real Vision Classics


Howard thank you for taking the time to join me today. It’s a pleasure to be here I know you have a busy schedule and and as I said I’ve read everything you’ve written over the years and and I wanted to thank you personally for sharing all those thoughts because they’ve been hugely Instrumental in me being out build my own framework, and that’s a lot of what I want to talk to you about Today’s is how you think as well as what you think and to start I just want to take you back to 2005 2006 which was a time when you were making some pretty aggressive moves at the time with oak trees portfolio And talking about them in terms. They had a lot of people kind of thinking is he nuts what this is some pretty dramatic statements to make so can you just take us back to that point in time and talk about what it was he was seeing and what you felt you had to charm prepare for what we want to know is when psychology is too high and Optimism is too high and as the consequence behavior becomes imprudent When behavior is imprudent then as the prices go too high based on Favorable expectations and the world becomes a risky place We actually made the best purchases we ever made in the summer of Oh – in the world of distressed debt Because we had the meltdown of the telecoms who had over borrowed to build fiber and we had the scandal companies and That was incredible, but the world bounced back from that Actually, it wasn’t an event in the world It was an event in a little corner of the credit market but it came back and everything was hunky-dory bio 3 and well in 204 and it just seemed to go on from there and the to me the most important thing was that in o 506 my partner Bruce Karsch and I spent the whole day complaining about the deals that were getting done Any crazy deal could get done, you know and when investors are Practicing the willing suspension of disbelief. It’s dangerous and In a prudent market where people are appropriately skeptical and risk-averse there are deals that can’t get done but in that environment they were and so we just took that as a great sign of danger and so we sold a lot of assets and we Liquidated some large funds we were managing it and only replaced them with small funds and raised the standards for the investments we would make and most importantly at the beginning of o7 our distressed debt funds had always been a billion or two and at the beginning of us seven we set out to Raise a reserve fund that would invest if if a crisis came along and That fund eventually reached 11 billion by march of oh wait now this is about the time when you wrote race to the bottom which is Probably one of your most widely circulated Memos that was in the first quarter of oh seven. Yeah, you know this was I’m fascinated in what it takes to go from talking about how crazy the market is and how bad these All these crazy deals get done to actually doing something about it because it’s so easy to sit there and say wow This is crazy and it’s still crazy three months from now. How do you how do you galvanize yourself to take action? So, you know what? We’re gonna go out on a limb here and actually do something about this my experience for some reason has enabled me to Not be afraid of being wrong, but I’m always conscious of the opportunity to be wrong but if I hold an opinion and if Bruce agrees, then I think the greater risk is is is not taking action, so You know, and the other thing is by that time You know I’d been in this business almost 40 years and I seen a lot of cycles and Cycles do tend to rhyme and we thought we were seeing the heated part of an upcycled, which is a good time to take defensive action, so the race to the bottom talked about the fact that that the securities markets and the lending markets are auctions and the opportunity to buy a security or lend money goes to the highest bidder and If you think about an auction for a painting or so like that The winner who pays the highest bidder as actually if you turned it around he’s the person Who was willing to receive the least for his money? And so if you are? making a loan and There’s a competition to make that loan The opportunity to make the loan will go to the person who receives the least for his money the least return and the least safety and the least structure and When the when too many people have too much money and they’re too eager to put it out then the bidding goes too far and the winner of the auction is actually a loser right because he does something imprudent but this is Fascinating because you know when I read that memory it was it was so simple But I mean it hits you like a ton of bricks when you look at it in just a slightly different way But but again, this was the first quarter of oh seven Yeah, so you were still quote/unquote wrong for a year and a half, right? So, how do you how do you manage that in terms of a lot of people? Have you been expecting markets to stumble for a while now? And they haven’t and we’ll talk about the fend and all kinds of stuff. I’m sure in a while, but how do you manage that? Expectation and then something you’re so sure about not happening. First of all, I’m never sure right don’t don’t use that word with me Everything I do is with trepidation. Yep henry Kaufman said there are two kinds of people who lose a lot of money the ones who know nothing in the ones who know everything I hope never to be either I use a lot of quotes and adages in my memos as you’ve seen in the book and when I speak and the first of the great investment adages that I have learned in the early 70s was that being too far ahead of your time is Indistinguishable from being wrong, but you have to live with that Yeah, because in our business if you’re wise you have a sense for what’s going to happen you Never know when and it’s the people who think they know when tend to get into big trouble if you accept all of that what it says is you have to think of what you think will happen you have to take action, but you have to be willing To wait that long period until it turns out to be correct action. I mean you also said What a wise man doesn’t beginning The Fool doesn’t yet? Which is again another way of saying the same thing as well. The wise man is early Yeah, and he has to wait but but waiting waiting and convincing your investors to wait is another there’s another level altogether I mean you obviously with your tenure in the industry your track record you you are given more leeway than other managers pets Which is perhaps the greatest advantage you can have but but still you have to manage those conversations with people and manage the fact that I Guess on a portfolio level you have to manage your risk and manage your bleed while you’re what you’re trying to wait for this scenario To unfold but how do you manage those conversations with investors who are saying hey Howard You said we should be worried about this. Look everything’s great because everything is great optically Well, we don’t have that conversation too often. But I if I had it I would say I didn’t say it’s gonna happen right away That’s the key, you know overpriced and Going down tomorrow are not synonymous so and and you know granted it meant in our business many things are overpriced and become more overpriced and more overpriced and immoral price and that’s how you go from a bull market to a bubble and So, you know we I Don’t know first of all, we have the confidence of our investors secondly The money we’re talking about is in closed-end funds where we don’t have to worry about people withdrawing so that’s That’s what you talked about having the confidence of your investors. The greatest advantage in this business is having ten-year money because you know Given the errors of the herd the pressure to sell is always greatest at the bottom and If you have ten your money, you don’t have to succumb to it. Yes. Sure. Well cycles, you mentioned cyclists I know you’re great student of cycles And they used to be so important in markets every everywhere you look whether it was the human cycle whether it was a market cycle credit cycles everything seemed to have a rhythm and it made Investing a lot easy because you could at least have some sense of how these cycles would turn That seems to have changed significantly in the last 15-20 years And you think in your head there’s I don’t I don’t agree with that I mean, I think that if you talk about 20 years if you came in this business 20 years ago You have seen two profound cycles, you know You had the TMT bubble and crash and then you had the mortgage bubble and crash and I think that maybe they weren’t predictable But I’m not sure they ever were you know, but you think would you I mean I wouldn’t classify those as cycles I kind of look at them and think they were both attempts at cycle turns that happen quickly in kind of Short order in small corners of the market and then got squashed quickly by by Fed policy Well, they were market cycles Bubble and crash. Yeah, they weren’t a dynamic cycle. Okay in the traditional sense and in the last 20 years, I think that developments in the financial world have taken over in importance from Developments in the rest of the business world, you know The mortgage crisis, for example, the global financial crisis had almost nothing to do with the economy You know in the I think what you were trying to get at is the fact that if you go back 30 40 years the the the Declines in the market were produced by declines in the economy, right? yeah, but the global financial crisis the the bubble had had little to do with the Economy and the crash had I think nothing to do with the economy It happened to bring on the worst recession in a long time, but it wasn’t caused by a recession It was caused by some funny thing that some people were doing down on Wall Street So so how do we get into that stage? You think where it it should be that the stock market responds to the economic cycle and recessions cause stock market crashes but we seem to have flipped that I think the financial activity became excessive I mean finance investing Financial engineering, whatever you want to call it Kind of took over in importance from the what you might call the industrial world Sometime in the last 25 years and it I Guess what? I mean? I haven’t thought about this and your question prompt me to do so, which is great But I guess what we now have is is the tail wagging the dog? the tail is financed the dog is industry financing used to serve industry and Then it became a thing in its own. I think that I think that Derivatives the the concept of derivatives had a lot to do with it if you you go to a football game and The game is played down there But you’re sitting here and you’re making side bets With the guy next to you, you’re not contributing anything to the game and that’s what derivatives is its side bets on on the on the economy and Business activity. It doesn’t do anything to it doesn’t contribute to society Now the people who who are in favor of derivatives say it permits people the transfer of risk which which has a place but I Don’t think it’s all necessary to accomplish the aims of society I need more time to think it through but my reaction is that it was I mean you think about The mortgage-backed securities, you know, I think that they they took a bunch of PhDs from Harvard and Princeton and and and in places like that and MIT and they sat him around a table and the boss comes in with a box full of mortgages and he dumps these subprime mortgages On the table and he says ok prize to the winner Who can configure these? So that the largest percentage of the result is triple-a Yeah, that’s called financial engineering quant behavior, but it doesn’t do anything for society. And in fact in this case it hurt sure. I mean It’s really been difficult for this last seems 25 years maybe to to put aside the Fed and Try not to point the finger at them for every single Yeah ill yeah, but you can’t help but go back to 87 in particular and look at what happened there in October and the response to it and think at that point in time something materially changed and And something became very very clear and you’ve you’ve written about this extensively, but it became very clear that The Federal Reserve a hostage to market fortunes and it wasn’t so clear then but just this week right we’ve had perhaps the greatest Example of that that we’ve seen right JPL’s you too. Yeah. Well, you know that it’s very challenging to run the Fed because you have three masters from for decades or centuries your job was to Manage inflation more in the last few decades. They also add the job of Supporting Employment which of course is in opposition? to controlling inflation and now they’ve thrown in the third which is to make sure the market goes up and I Think that’s very troublesome So I don’t even know if they’ve run there and it seems to me that the Fed have said hey, you know We’ll take that will turn it but they but they really have created a road for their own banking. Well, you know Alan Greenspan saved the markets a few times and then That gave rise to the belief in the Greenspan put and Everybody figured well if anything goes wrong The Greenspan will just bailout the economy and the markets with some extra liquidity. So We don’t have to worry about the risk of the things we’re doing and of course that’s called moral hazard Yeah, and it’s a terrible thing But the the Greenspan put beget the Bernanke put which we get yell important. You know when Powell came in there’s there’s a Transcript of an FOMC meeting from October 2012 where he was newly on the board I think and he talks about this moral hazard He talks about the market’s reaction To the Federal Reserve and he he essentially lays out the fact that he understands exactly the transmission mechanism. He understands what they message They’re sending what they’re doing what the market believes and what the market wants And so when he came into the role, you know, I foolishly believed that okay. Here’s a guy who gets it But either way if he caved or didn’t cave at least we know we’d know that it’s all about Keeping the mark up or it’s all about reality and I think we found out this week that it’s all about the stock market So does that clear the decks? Well well maybe when you were Posing that me I was thinking So what you’re doing is you are you have the game? You have the guys in the stands. Yep, and you’re Changing the game for the benefit of the betters. Yep. That’s exactly right. Right, and that’s not a good idea The important thing is to keep the that the game is played well and the investment markets can take care of themselves When do we get to the point where a recession is something that has to be avoided at all costs? Yeah Well, it’s a it’s a big mistake in one of my memos post-mortem for the global financial crisis I talked about forest fires. Yep, and Good forest management you permit there to be fires once in a while and if you if you if there are fires of Moderate size occasionally it burns out the fuel and then you don’t get the one big one same thing in my opinion and The the Fluctuations of the economy are natural in my opinion and Should be permitted to occur. Yeah, and if you try to forestall them then when they happen I don’t think you can forestall them forever and when they happen they’re bigger So when you look across the lens and excuse me, and the attempt to forestall them creates moral hazard Yeah, that’s that’s the key but when you look across the landscape at this this kind of Construct that we’ve built ourselves within the Federal Reserve or the central bank controlled world. They can’t control this forever shortly, right? There must come a point where things get out of hand Do you sense? coming back to that original question at 2005-2006. Do you see any similarities in in what you’re seeing? What starting to make your spidey sense tingle? similarities in the sense of Specific things repeating. Yeah, but I have felt that because people were traumatized by the Great Recession The recovery has been the slowest one since World War two and that has kept Things moderate which meant that we would certainly have a recession one of these days But it would be moderate it wouldn’t when you don’t have a boom. You don’t have to have a bust in my belief But now between the tax bill which was a shot of adrenaline into in my opinion and already healthy patient and then the Possibility that we’re going to see a Powell put in action. I think that We may get two highs that Lead to lows You know, I think that when when I was writing I’m a believer in cycles believe they always have occurred I think I understand why and I think they always will occur and And I tried to study them And then when I kind of got to the end of writing the book I said, well why? Do we have cycles if the market goes up 10% a year on average? Why doesn’t just go to 10% every year why and in fact it almost never goes up between 8 and 12 So the average is not the norm. Why not and The answer I think is excesses and Corrections. So you have a trend line and most trend lines are upward sloping Yep but then you deviate from the trend line on the upside because of Some combination of optimism and greed and wishful thinking and then you have to have a correction to the downside. So Now I’m thinking we may have more of an excess which leads to more of a correction You know, I’ve thought a lot about this too. I’m a great believer in cycles and everything. I’ve read in history demonstrates Beyond any argument that they do exist everywhere, you know I when I think that through I put that down to a human of you know we are we have this a cycle of life and and markets are nothing but the collective representation of our Greed and our insecurities and our cycles and you know that that’s a major theme at the bottom yeah, exactly the end, but it but it’s not it’s a hard thing to argue that that when Pete and I’ve had a lot of people tell me I’m wrong cycles don’t exist and and you shouldn’t really build any kind of investments theses around which I found remarkable the cycles come primarily from the behavior of people and I don’t see how you can argue that people are not prone to excesses and repeating them and and you know the the big theme of the book is Mark Twain history does not repeat, but it does rhyme and the World is just too unstable a place to believe that stability is the norm and You know, if you think about it in the economy a great year is up for and a bad year is down Too so the economy has an upward trend then it kind of goes like this Then companies have leveraged financial leverage and operating leverage So their profits go like this and then the market goes like this and why? because of people yeah, you know the risk in the market does not come from stock certificates companies Exchanges it comes from people. Yeah, but people are prone to excess and and I Don’t see how it can be argued otherwise and by the way when people say I Don’t think we’re gonna have cycles in the future because the astute Fed has it under control or whatever it is what they’re saying is the the what I consider the Four worst words in the world. It’s different this time, you know, okay until now we’ve had cycles But we’re not gonna have anymore well I mean your point is so well taken particularly with the idea that if you misaligned the incentives and you offer moral hazard To we human beings the excesses are just going to get greater because that’s that’s what we’ve always done you know something else that some that cyclical is is Political leanings to left and right and this is something that’s occupied a lot of my time recently Just trying to think all this through it. We are at seemingly a remarkable point in history where Capitalism is under threat. Yes. Now I would argue that we don’t have capitalism anymore. It’s something completely different I think we had capitalism maybe some of these problems wouldn’t be here, but you wrote very eloquently about the The move to socialism perhaps you could talk a little bit about how you see there because it’s a phenomenon. That’s everywhere the moment Well as I say in the memo, I think that in the sixty years immediately after World War two We had a strongly rising tide throughout the world and it raised all boats and and Most people were happy some people did better than others but everybody just about everybody did pretty well and the the ones who did the best didn’t didn’t didn’t do that much better than the ones who did the worst so we didn’t have the great inequality, and so it was a sanguine environment and Reagan and Thatcher came along and talked about the wonders of the free-market system and the world applauded and So that was a swing of the pendulum in that direction but now the growth I believe has slowed the Distribution of incomes is more skewed. It’s more important today to have either a Good education or capital and the people would neither who just have a strong back Because of automation and globalization, you know I think that we’re running out of jobs for them and that’s gonna be a big deal in the future this to me That’s the biggest single problem we have in the next decades and so but especially because of the inequality and also because now the people who do best do So much better than the people who? Who do worst that? There’s a lot of dissatisfaction with the results of this so-called free market system and so the pendulum in some quarters is swinging against it and we have a lot of Anti-capitalist and anti capitalism rhetoric. I mean you quote Churchill. Yeah He talks about the capitalism is the best system, you know, sorry the worst system except for the others Well, he said it about democracy. Of course Right, but but but I think it’s true of capitalism either. I mean it has flaws But one of the things I said in the memos We must not adopt things Because they have benefits without thinking about the costs and we must not reject things because they have flaws Without thinking of the benefits and what? capitalism is Highly imperfect and what’s better? That’s the point and Where are the examples of successful? planned economies I say in the memo that I can imagine the the politician from the left Railing against capitalism on Facebook and Twitter via their iPhones in meetings they went to in via cars and airplanes and maybe ride-sharing in face-to-face meetings over a Starbucks coffee and over the cable news networks and none of those things would exist if it wasn’t for the incentives of the free-market system and so everybody says and The people from the left say I don’t like the inequality, so I want to change the system But they don’t ask how we got to where we are or what Changing the system would do to the future and I think these are important questions and unfortunately, though Populist rhetoric Has an immediate appeal The opposite the appeal is intellectual, you know, which is not so easily Communicated was very interesting because you put the definition of populist in the moment from the from the free dictionary I think it was and it was very degrees. I hadn’t read that exact definition because it talks about Disenchantment against the elite. Yes Well, actually what it said is the struggle of the people people Yeah against the elite because then I said I think what they should add is the word resentment right? Let’s anyplace to resentments, but it’s interesting because I hadn’t thought of it in that context that Popular’s populism is Necessarily against the elite ruling class or thought of it in those terms because once you do that, you instantly understand why the rhetoric is The populism is so evil and so dangerous and so troublesome, right and obviously people get painted as extreme, you know There’s lots of extreme right-wing as there’s no extreme left-wing. It’s in which is interesting now, there will be But that’s that’s where we seem to be moving towards and we’ll come on to that in a second but I just want to go back to that that that Income inequality you talked about because the thing that always strikes me is there’s no mystery about how this has occurred it’s very plain to see how this has occurred and yet nothing is being done at the grassroots zero cost of capital level that has enabled this and You and I could pull up any one of 50 charts and in any one of those charts. It’s plain as day is this something that is never going to happen because it’s not in the interest of those who make those decisions or Are they going to start to feel the heat and maybe decide to tweak it a little bit against themselves? 1970 I made I was a kid from Queens New York and I made my first business trip to California and I was down in Laguna Beach and I was I think speaking with My wife on the phone and we’re talking about how I said so great down here you know because you call out your play on the beach and the sunshine and there’s palm trees and there’s Sand and I said, I just probably don’t want to be around when the have-nots come up the road 16:17 now, it’s 50 years later So I was again Too far ahead of what? sand and that’s wrong, but the point is Now it looks more likely that the leftist sentiment will influence the debate I Don’t I wouldn’t go so far as to think that the that the next president will be a leftist But I think that it will just like Bernie Sanders I think forced Hillary to move her rhetoric to the left and then might have Caused her to move her actions if she were elected. I think that Ocasio Cortez and and Warren and so forth will and sherrod Brown will cause the center of the Democratic Party to Cater in some way to the left. I mean certainly seems that way when you look at the traction that That Acacio Cortez is getting and and Liz Warren and and it’s clear that they both realize that This is how we’re going to create that traction by going Against the elite but some of the some of the things they’re proposing, you know, the seventy percent tax You know Liz Warren was on MSNBC Looking straight down the camera rail saying we’re gonna find your wealth and we’re gonna come and get it I mean, these are things that I’m sure a lot of people in America never thought they’d hear right in this country Well, you know I think the thing in the memo that I got he about the most and I was trying to put it out and then Friday Elizabeth Warren came out with her Wealth tax idea, but what got me was that she tweeted it out. Of course and was was the way she did it. She said something like don’t quote me the rich and powerful powerful run America and Look at what they look at what they have arranged for themselves They don’t They are allowed to keep their accumulated wealth Well, guess what? We’re all allowed to keep our accumulated wealth and and she makes it sound like through some skullduggery they have Exempted themselves from the wealth tax you can’t exempt yourself from something that doesn’t exist. Yeah, but she makes it sound nefarious and That’s populism. They they you know, and and it’s uh, It’s not constructive. You know, I I would Lay a strong bet that five years from now. My tax rate will be higher than it is today Yeah, but it should be as I said In the memo, it should be progressive but not punitive And not confiscatory Among other things People don’t have to sit still and pay it. I wrote a memo back in 2016 called economic reality and I talked about a Guy I know who was who was the biggest taxpayer in New Jersey they raised the rates to a point where he moved to, Florida where there is no tax so the point is The the people who want to confiscate seem to think that There’s nothing that the confiscate EES can do about it It’s funny because when you look at the two we’re talking about Casa Cortez and this warrant, you know Liz Warren’s been around long enough to have seen this experiment tried in the UK for example in the 70s It was a complete disaster and one would think Brilliant academic that she is that she’s read plenty of history and understands that this really has never worked Acacio Cortez on the other hand hasn’t been around long enough to have seen it for herself. Maybe she’s read about it maybe she hasn’t but she’s also the voice of the largest generation in history Who are now coming into the period in their lives where they need to be out of Ford homes and afford? All the kind of things that we and the generations of others have taken for granted So you can see the problems that slow writ large. Yes, but it’s hard to see away when the political divide is so extreme that there’s any way that the two sides can like figure out some kind of Solution to this that that doesn’t cause some real problems down the road. Well, my main political activity right now is something called No Labels The goal of which is to bring the two sides together and to act in a bipartisan way It may be a pipe dream But I think it’s the best hope so, how do you go about doing that? I mean on a practical basis work for the election of and you support people who will cross the aisle and work with the other side and compromise and and and a compromise would among other things today be ideological and We’ve reached the point where he he worked with the other side Is an epithet. Yes But you know if you go back to my boyhood That’s what people did and they produced compromised legislation so instead now when when you can’t work with the other side what you get is either nothing or Legislation which has no support from the other party so Obamacare was done with zero Republican support and the and the Trump tax package was done with zero Democratic support and that was the goal. Yes Now what the hell kind of goal is that it is an American To have it as your goal That you don’t want the support of the other side yeah, and then all you get is divisiveness, but this this is this is a problem that you know politicians that was their art they could they could talk to the other side and come up with compromises remove it but now If you take it down to it to a family level there are families that can’t talk politics over 1070 Or because they’re rapidly on one side and I you know, I I kind of observed this as as an Englishman transplanted into America which is a country that I fell in love with at the age of 10 when I first came here and and it’s always been this beacon to me of Everything that that you would want from from the leader of the free world and everywhere. I look I see this divisive nasaw It’s really hard even if you try very carefully to tread a middle line And even in your memo, you know I you you went to great pains to reinforce that I’m not I’m not picking a side here. I’m trying to get people together it Does it take something dramatic? To bring the two sides Together or is this something that you think maybe over time will be forced to heal the rift? Well No Labels is hoping that there will be a grassroots, you know, we read for example That something like 80% of Americans think there should be some gun controls And you can’t get them, but what does that mean? It means that the politics and tactics of division Somehow are stronger than the tactics of two together in this and so It has to be either a grassroots effort and By the way, things might have to get worse before they get better, but I don’t know. I’m not sure how they can but Well now that we have a Democratic House and a Republican Senate, you know We’re probably gonna have gridlock for a long time and I’ve argued in the past that we have real problems That have to be solved. For example, we know that Social Security is going to fail. Yep There are only a few things you can do. You can raise the tax rate You can raise the amount of income. It applies to you can reduce the benefits you can lower delay, the the Retirement age you can have a means test. There aren’t many more than that And if you don’t do any of those it’s going to go bust And you don’t do anything what’s the last time you even heard about it being discussed because it’s not good for politics and You know, the tremendous amount of our problem has to do with the media and communications and you know People say I only want to hear the news that I agree with and of course nowadays You can easily visit which means that you never hear an argument for the other side So how can views become moderated? I don’t know what the solution is, but I hope there is one well But at least we’ve identified the problem. I guess that’s the first step. Yeah, the memo is called economic reality meets political realities Well the other way, yes, right but so let’s talk about the economic reality of this because the political Reality is you are never gonna get to the bottom a listen in the time we have but the economic reality How do you take what you’ve observed on the political scene? you take what you’ve looked in terms of asset prices and valuations and you take what you’ve seen from the Fed and the interest rate cycle How do you apply that to your investment philosophy right now? Has it changed? Anything has it made you adjust anything. I think that Grant the most important decision for an investor at a point in time regard to the intermediate-term I wish I mean not tomorrow and not 30 years But the next two to five years the most important decision to make today is whether to invest aggressively or defensively And it’s not all one or all the other but how do you mix the two, you know an investor like me faces two risks every day The obvious risk that everybody knows about is the risk of losing money the other risk which is a little more subtle is the risk of missing opportunity and So what most people say is well, I don’t want to lose a lot of money but on the other hand I don’t want to miss all the opportunities. So I’m gonna do something that compromises on the two and each person’s Positioning visa vie the two risks should be different based on their circumstances but still then this that’s the first question and then the second question is You figure out your normal risk position you look at today, and you say well today, should I be worrying more than usual about losing money or more than usual about missing opportunity and you know, I just think that the world is an uncertain place and The things we’re talking about contributes to the uncertainty. And so today I would emphasize Avoiding the loss of money a little higher than Than usual visa fee avoiding the risk of missing opportunity everywhere. You look across the financial landscape. There are there’s a series of successful Importantly pragmatic investors who are coming out and and issuing what the headline writers called stark warnings or dire warnings Seth Klarman being the most recent perhaps during the Davos thing recently that I’m always interested that that Cacophony of voices that gets louder and louder and and more respected by the day Doesn’t seem to change behavior at all we seem to be in this period where do you’ll find that fear of missing out is being re-weight adjusted by the smart investors the guys who are always early and yet the retail investors are Wiping their brows and saying what December’s over Kramer said the markets going to go up We should we should investigate the different Christmas say everything’s good again Do you know deep deep when you look at the Y average retail investors think about this? Do you fully want to find a way to reach out to them? Say listen? You need to think about it like this. You’re not thinking about this correctly. It’s a tough one. Yeah grant because You know, I always imagine you know, the the movies that are made for the teenagers and over here sitting on their shoulder you have The angel saying don’t do it. It’s not prudent you, you know, you’ll regret it in the morning and over here You have the devil saying do it? It’ll be fun and the devil wins every time That’s why we have the movie right but in in the in the investment business, you know You have prudence and history and knowledge of cycles and and the consciousness of the of the risks and over here The devil says do it you’ll get rich and you know wishful thinking there’s the desire to get rich is really dominant and and and the fear of missing out together and So we saw in the fourth quarter an incredible swing of psychology from positive to negative, but then back and most of the Damage has been made up and You know, most people don’t invest in the long-term They’re just trying to bet on what the market is going to do The the retail that you describe but also many professionals Yes, because they’re they’re afraid to be cautious and miss a good month. Yeah, because they could lose business and It kind of goes back maybe to your first question, which is that most people are afraid to be wrong and Since the market goes up most of the time being wrong consists of being out Which means most people are afraid to be out and so they they’re their nature doesn’t permit them to get out Until it’s too late until until the crisis is upon us. Yeah, so you talk about The volatility we saw in December, which was is the first such volatility We’ve really had a brief night break out a little while ago They got squashed quite quickly, but this is the first you know We’ve seen five and eight hundred point moves down in the Dow which is come as a surprise to a lot of people But but do you think something has changed do you think what we saw in December is? an early indication that we are moving into whether it’s a pause phase and the markets going to find its new course or We’ve reached the top and maybe we’re gonna bumble around here for a while before going low You know, one of my favorite quotes is from Einstein who said something like I don’t think about the future. It’ll come soon enough I don’t try to guess what’s gonna happen I just try to make good fundamental investments and and they tend to take care of themselves either soon or later but I mean What you had was? what was a crazy swing of psychology, you know, I One of my favorite memos was in February of 16 remember the market got off to a terrible start and I wrote a memo called on the couch because I think every once in a while the market needs a trip to the shrink and I said in there that in in real life things tend to fluctuate between pretty good and not so hot But in in the market people act as if they go from flawless to hopeless and that’s what happened in October you know, I know my new book came out on October 2nd and I can tell you that the mood was quite good and You know in the months and years A couple years leading up to October 2nd. The the main comment I got from people was well We know it can’t keep Going on well for ever but we can’t think of anything. That’ll make it stop Right, and that was true up to then and then on October 4th The market decides to go down And it went down for the next 80 days in one of the worst Declines that’s been seen in a long time. Wait, I think the worst December in history if I’m not mistaken, so What changed and You know my next memo maybe in this subject because I’ve been storing up thoughts but Fundamentally, not much changed. I mean the What was it that made the market start going down on October 4th? Well, they said be well, but the 10-year just hit three and a quarter, but of course it was expected You know rates were expected to rise Oil was weak well I don’t think that’s really of great fundamental importance because it’s actually good for society when the price of energy goes down Well, there may be a trade war with China but that you could see coming for nine or twelve months so nothing really changed its except to the mood and I think the mood is absolutely unpredictable. So I don’t even think about that and Fortunately, I don’t make my business that way it’s interesting because that Hearing you said it makes it real that’s exactly what most people do it’s all about mood They have it completely flipped around the gage sentiment. They they they chase momentum and to your point. It’s not just retail investors It’s a lot of professionals for some of them against their better judgment but You know, we all have to try and manage risk to me First of all, you know, I’ve been a trader Mike my entire life So for me, the first thing is always the risk. It’s not the opportunity I always look at the risk and think okay Once uncomfortably the risk then how is the best way to play the opportunity? Is there a time when you shift the way you think about making those longer-term investments? do you have – is it a fund your fundamental investments fundamental practices behind them that are Constant or do you find that when you get to certain points in the cycles that you follow so closely? You have to shift the way you assess risk and opportunity Remember what I said aggressive defensive? Yeah so sometimes just that yeah sometimes and and but it’s it’s often a bottom-up thing see because it’s not like well you find a bunch of investments and Sometimes you decide to go heavy and sometimes you decide to go like what it what it is Is that sometimes you find a girl a lot of great investments and they tell you that? This is the time to lead up that load up the boat and sometimes you can’t find any bargains and they tell you This is a time to be defensive. So it’s not an independent decision You see now you can make a lot of people make that decision top down They look at the macro. They look at the whatever the number technical and all the trading numbers and and all those things and I look at the mood of the environment I look at how people are acting and thinking and talking and that tells me Also, whether I should be aggressive or defensive as I described in oh five six but it always cut it also comes through in the investments, you know, you find things that you say Well, that’s I think that’s half what it should be I’m going to load up the boat. So you turn aggressive, but for the most part you don’t get many of those opportunities when the market is galloping along and everybody’s optimistic and and Risk. Aversion has gone out the window So it’s it’s all of a piece but I do think that it’s desirable at the extremes to alter your behavior Now I was working on the book and I gave some chapters to my son to read who works on our family investments and I Told him you know, I think my market calls have been about right And he said yeah dad. That’s because you did it five times in 50 years, right? The point is and it’s I didn’t even stop to think about it that much but of course I thought about it in this later days, but When you are at an extreme high or an extreme low the logic is compelling and The probability of being right is high But when you do it in between, you know the markets 5% overvalued 2% undervalued 10% override it the logic is not compelling and The probability that you’re right is modest at best so five times in 50 years once a decade and that’s what we tend to get we get to tend to get one of these and one of these a decade and But these are not always extreme and so You can’t make a career out of playing the extremes of the cycle, but They can inform what you do and you can modify your behavior in between but you shouldn’t Count on being right, you know, it’s the perfect way to wrap this up. Thank you so much for doing this I’ve been I’ve been waiting to talk to you for such a long time and it’s been is very for most of thank you for In you made me think about some things I hadn’t thought about. Well, that’s a feather in my cap. I take that from you Thank you pleasure

Thought Starters series – thought provoking ideas about the key trends shaping business


I think this is a very,
not just disruptive era. I think that’s become a cliche. I think it’s a revolutionary
era where there’s ruptures with the past. I think the future work
is incredibly exciting where the pressure’s going
to be on for employees to add extraordinary value
through human connection. Are people shopping all the time? No, they’re consuming
content all the time. Mastering the urban last mile, there’s not a one-size-fits-all solution. People have been using
technologies to reach out. I mean I think the biggest
thing that social media did was allow a direct
conversation with consumers. You’re amazed what can be done with data that seems so dull in the first place. In a world where we are
facing the rise of AI. I don’t think we know
exactly where it’s going. It’s probably revolutionary, but I wouldn’t assume the worst. Consumers are getting
increasingly demanding and they’re very, very sophisticated. It was at a scale that
was earth-shattering. That’s moments right now where the future is leaking into the present.